When a Parent- Subsidiary Relationship Exists Between Two Companies

question 44

Multiple Choice

When a parent- subsidiary relationship exists between two companies,:

• A)the parent company must use the cost method to account for the subsidiary.
• B)the parent company will keep one set of accounting records covering both companies.
• C)both the parent and the subsidiary will continue to keep their own separate accounting records as if the parent- subsidiary relationship does not exist.
• D)the subsidiary company will keep one set of accounting records covering both companies.

Comprehend how foreign exchange rates affect international transactions and their reporting in financial statements.

Distinguish between various methods of accounting for investments depending on the level of influence over the investee.

Recognize the impact of changes in fair value on the reporting of available-for-sale and trading securities.

Learn the specific accounting treatments for unrealized gains and losses on securities.

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Definitions:

Carbohydrate Diet

A dietary plan focusing on foods high in carbohydrates, including sugars and starches, often for energy or weight management.

Calcium Diet

A dietary plan that emphasizes foods high in calcium, essential for bone health and various metabolic processes.

Obesity

A medical condition characterized by excessive body fat accumulation, significantly raising the risk of health problems like heart disease, diabetes, and high blood pressure.

Sodium Reabsorption

The process by which the kidneys filter sodium from the urine and return it to the blood, maintaining fluid and electrolyte balance in the body.